The Uruguay Round
Assessing the GATS

The General Agreement on Trade in Services (GATS) is a landmark in terms of creating multilateral disciplines in virgin territory, but a failure in terms of generating liberalization and locking in existing policy regimes affecting international transactions in services. In Discussion Paper No. 1150, Research Fellow Bernard Hoekman suggests that there are two key issues that should be addressed in evaluating the GATS. First, what does it do to bind policies? Second, has it established a mechanism that will induce significant liberalization through future rounds of negotiations? He concludes that the GATS does not score very high on either dimension, and that it has a number of weaknesses, including a lack of transparency, the sector-specificity of liberalization commitments, and the limited number of generic rules.

The author notes that there are many challenges that need to be addressed by negotiators if the GATS is to become an effective and therefore credible instrument of multilateral liberalization. The sectoral coverage of the GATS must be greatly expanded through binding of all measures violating national treatment/market access. The set of generally applicable rules and disciplines must grow significantly, and the weight of the specific commitments reduced. The approach taken towards scheduling commitments in the Uruguay Round needs to be critically assessed to determine whether it will be conducive to achieving significant liberalization of service markets in the future. Realism suggests that proposals for improving the GATS must build upon the existing structure as much as possible. A number of suggestions are made to strengthen the Agreement and support more far-reaching liberalization in the future.

Tentative First Steps: An Assessment of the Uruguay Round Agreement on Services
Bernard Hoekman

Discussion Paper No. 1150, March 1995 (IT)